BofA, Citi, Wells Fargo Not Too Big To Fail, Says Moody’s

By Avi Salzman

Moody’s downgraded the credit ratings of Bank of America (BAC), Citigroup (C), and Wells Fargo (WFC) today, as the chances of further U.S. support for the banks appears to be diminishing.

“The downgrades result from a decrease in the probability that the US government would support the bank, if needed,” the ratings agency said in its release about bank of America. “Moody’s believes that the government is likely to continue to provide some level of support to systemically important financial institutions. However, it is also more likely now than during the financial crisis to allow a large bank to fail should it become financially troubled, as the risks of contagion become less acute.”

The downgrades differed for each bank. Moody’s cut Bank of America’s senior debt rating two notches to Baa1. That’s three notches above junk.

Wells Fargo’s long-term rating fell one notch to A2.

And at Citigroup, the agency left long-term debt ratings intact but downgraded short-term ratings to Prime-2 from Prime-1.

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